Precision Medicine Requires Targeted Cancer Therapies, but Payers Reluctant to Pay for Some Genetic Testing Needed to Match a Patient with Right Drug

Clinical labs and pathology groups know how advances in targeted therapies and genomics far outpace providers’ and patients’ ability to know how best to use and pay for them.

One fascinating development on the road to precision medicine is that many new cancer drugs now in clinical trials will require a companion genetic test to identify patients with tumors that will respond to a specific therapeutic drug.

This implies more genetic testing of tumors, a prospect that challenges both the Medicare program and private health insurers because they already struggle to cope with the flood of new genetic tests and molecular diagnostic assays. However, even as this genetic testing wave swamps payers, some pharmaceutical companies have cancer drugs for rare types of cancers and these companies would like to see more genetic testing of tumors.

Pathologists and clinical laboratory managers will find this to be precisely the dilemma facing specialty pharma company Loxo Oncology (NASDAQ:LOXO), a biopharmaceutical company located in San Francisco and Stamford, Conn.

Loxo is developing larotrectinib (LOXO-101), a “selective TRK inhibitor.” According to a Loxo press release, Larotrectinib is “a potent, oral, and selective investigational new drug in clinical development for the treatment of patients with cancers that harbor abnormalities involving the tropomyosin receptor kinases (TRK receptors).” In short, the drug is designed to “directly target TRK, and nothing else, turning off the signaling pathway that allows TRK fusion cancers to grow.”

How to Find Patients for This Cancer Drug

While a powerful, new, targeted cancer drug will be a boon to cancer therapy, it is only intended for a relatively small number of patients. Loxo estimates that between 1,500 and 5,000 cases of cancer are caused by TRK mutations in the United States each year. Conversely, according to the National Cancer Institute, the total number of new cancer diagnoses in the US in 2016 was 1,685,210.

An article in MIT Technology Review on larotrectinib notes, “To find patients, Loxo will need to convince more doctors to order comprehensive tests that screen multiple genes at once, including TRK.” And that is where things get complicated.

“These advanced genetic tests, which can cost $5,000 or more, are offered by companies like Foundation Medicine, Caris Life Sciences, and Cancer Genetics. The problem is, insurers still consider the tests ‘experimental’ and don’t routinely cover them, meaning patients are often stuck picking up the bill,” notes MIT Technology Review.

Data for the graph above comes from theNational Human Genome Research Institute. The graph illustrates the steep decline in cost for whole genome sequencing over the past 17 years. As the cost of genetic testing drops, development of targeted-drug cancer therapies increases. Clinical laboratories and anatomic pathology groups can expect to be performing more such tests in the future. (Graphic copyright: National Human Genome Research Institute/Simple English Wiki.)

To further confuse the market, the National Cancer Institute states that “Insurance coverage of tumor DNA sequencing depends on your insurance provider and the type of cancer you have. Insurance providers typically cover a DNA sequencing test if there is sufficient evidence to support that the test is necessary to guide patient treatment. Tests without sufficient evidence to support their utility may be considered experimental and are likely not covered by insurance.”

That, however, leads to a different conundrum for drug makers such as Loxo: the majority of doctors are not keeping up with the rapid-fire pace of discovery in the realm of genetics and targeted therapies. Some genes like BRCA1 and BRCA2 are familiar enough to doctors that they know how and why they are important. However, most other genes are less known, and critically, less understood by doctors who must also focus on all the other myriad aspects of patient care.

Further complicating the issue, there is an enormous lack of information on how multipanel screenings will affect individuals, public health, and the cost of healthcare in general. Several studies are underway, but they are so new it could be years before any real results become available.

Five years ago, it cost about $20,000 to sequence the whole human genome. Now the average price is $1,500, though there are more and less expensive types of genetic tests. As the cost continues to decline, however, more people will undergo the testing and scientists will learn more about how to identify the best therapy to treat cancers caused by genetic mutations.